DETERMINANTS OF EARNINGS-PRICE RATIOS: A REEXAMINATION

This paper incorporates recent equity valuation theories into the examination of determinants of earnings-price (E/P) ratios to explain cross-sectional differences in E/P ratios. The results show that ex ante measures of risk and growth as well as the payout ratio are the main determinants of E/P ratios. The persistence measure is not significantly related to E/P ratios. The results are robust to ordinary least square models as well as to a tobit censored regression.     

Understanding college students' opinions on a smoking policy

Because of the negative aspects of smoking, the US National Center on Addiction and Substance Abuse has recommended that university campuses should be smoke free. The purpose of this research was to learn students' opinions about the effectiveness of a smoking policy on campus. The policy simply stated there should be no smoking within 30 feet of a building. However, no areas were designated as smoking areas. Using phenomenological inquiry, the authors observed and interviewed both smoking and non‐smoking students. Findings suggest that the existing smoking policy was weak and often ignored. Students felt the purpose of the smoking policy should be clearly stated because they were not sure if the policy was intended to make smokers quit or prevent them from smoking in front of doors. This study demonstrates the utility of careful observation as a prelude to the design and implementation of qualitative data collection methods. The results indicate observation is a valuable part of a qualitative research strategy.     

Optimistic bias in management forecasts by Japanese firms to avoid forecasting losses

Listed firms in Japan are effectively compelled to report management forecasts of sales, ordinary income, and net income along with actual earnings and sales each year. Prior studies report that Japanese managers tend to announce optimistic forecasts of earnings. We show that a large part (61.6%) of the overall optimistic bias in management earnings forecasts in Japan can be explained by loss forecast avoiding behavior of a small fraction (5.25%) of firms. Such behavior is caused in part by the view of the main bank and power group that the management forecast of earnings is the manager's earnings target. Our findings suggest that the Japanese stock market recognizes such loss forecast avoidance and accordingly discounts new information in management forecasts.     

Biogeography based optimization for mining rules to assess credit risk

Financial institutions, by and large, rely on the use of machine learning techniques to improve the classic credit risk assessment model for reduction of costs, delivery of faster decisions, guaranteed credit collections, and risk mitigations. As such, several data mining and machine learning approaches have been developed for computation of credit scores over the last few decades. Moreover, the existing rule-based classification algorithms tend to generate a number of rules with a large number of conditions in the antecedent part. However, these algorithms fail to demonstrate high predictive accuracy while balancing coverage and simplicity. Thus, it becomes quite a challenging task for the researchers to generate an optimal rule set with high predictive accuracy. In this paper, we present an effective rule based classification technique for the prediction of credit risk using a novel Biogeography Based Optimization (BBO) method. The novel BBO in the context of rule mining is named as locally and globally tuned biogeography based rule-miner (LGBBO-RuleMiner). This is applied for discovering optimal rule set with high predictive accuracy from the dataset containing both the categorical and continuous attributes. The performance of the proposed algorithm is compared against a variety of rule-miners such as OneR (1R), PART, JRip, Decision Table, Conjunctive Rule, J48, and Random Tree, along with some meta-heuristic based rule mining techniques by considering two credit risk datasets obtained from University of California, Irvine (UCI) repository. It is found from the comparative study that the proposed rule miner in ten independent runs of ten-fold cross validation outperforms all of the aforesaid algorithms in terms of predictive accuracy, coverage, and simplicity.     

Earnings management and deregulation: The case of motor carriers

This study investigates the discretionary accounting choices of federally-regulated interstate motor carriers during the period in the late 1970s when the U.S. government successfully deregulated the industry. We predict that motor carriers were likely to use income-decreasing earnings management to lessen the public perception of excessive industry profits and thus to avoid deregulation that during this period of heightened political cost.     

Use of behavioral reasoning theory to examine the role of social responsibility in attitudes toward apparel donation

Drawing on behavioral reasoning theory, this study investigated drivers of young consumers’ apparel donation behavior. By examining the impact of values (i.e., benevolence and power) and reasons (i.e., other‐oriented reasons and self‐oriented reasons) on attitudes, this study highlights the different motivations individuals have for donating clothing. As predicted, benevolence was positively related to other‐oriented reasons for donations and power was positively related to self‐oriented reasons for donations. Both other‐ and self‐oriented reasons for donating influenced attitudes related to apparel donation behavior. These findings offer an overarching explanation for the seemingly disparate reasons for apparel donation previously identified.     

Professors on the Board: Do They Contribute to Society Outside the Classroom?

According to our data, 38.5 % of S&P 1500 firms have at least one professor on their boards. Given the lack of research examining the roles and effects of academic faculty as members of boards of directors (professor–directors) on corporate outcomes, this study investigates whether firms with professor–directors are more likely to exhibit higher corporate social responsibility (CSR) performance ratings. Results indicate that firms with professor–directors do exhibit higher CSR performance ratings than those without. However, the influence of professor–directors on firm CSR performance ratings depends on their academic background—the positive association between the presence of professor–directors and firm CSR performance ratings is significant only when their academic background is specialized (e.g., science, engineering, and medicine). Finally, this positive association weakens when professor–directors hold an administrative position at their universities.     

Deep learning in finance and banking: A literature review and classification

Deep learning has been widely applied in computer vision, natural language processing, and audio-visual recognition. The overwhelming success of deep learning as a data processing technique has sparked the interest of the research community. Given the proliferation of Fintech in recent years, the use of deep learning in finance and banking services has become prevalent. However, a detailed survey of the applications of deep learning in finance and banking is lacking in the existing literature. This study surveys and analyzes the literature on the application of deep learning models in the key finance and banking domains to provide a systematic evaluation of the model preprocessing, input data, and model evaluation. Finally, we discuss three aspects that could affect the outcomes of financial deep learning models. This study provides academics and practitioners with insight and direction on the state-of-the-art of the application of deep learning models in finance and banking.     

The Relationship between Mutual TSI and Interfirm Contracts: The Moderating Effect of Strong Ties

ABSTRACT

Purpose: This study examines the influence that tie strength has on contractual relationships between exchange parties with specific investments and also explores the role of network intensity in contractual relationships between buyers and suppliers. We hypothesize that the relationship between transaction-specific investments (TSIs) and contracts is moderated by network intensity.

Methodology: An empirical test is carried out by analyzing buyer–supplier relationships of manufacturing companies. The construct measures were based on those obtained from prior research, and the reliability and validity were established using exploratory and confirmatory factor analysis. The overall measurement model was then assessed with structural equation modeling using AMOS.

Findings: We focus primarily on contract variables as a governance mechanism that can be affected by the strength of ties among firms and the results of our empirical study indicate that supplier TSIs improve the use of informal contracts while the use of formal contracts undermines the effect on supplier TSIs. In addition, we found that firms with weak ties with their partners in the network are more likely to use both formal and informal contracts than those with strong ties.

Contribution: Our study has several contributions. First, our research improves the understanding of the relationship between TSIs and the choice of contracts as a governance mechanism, especially for mutual TSIs. Second, our research improves our understanding of the network strength in the context of business-to-business relationships extending the understanding of the relationship intensity among firms in a network. Third, we focused on the effects of network intensity on contractual relationships.     

Style consumption: its drivers and role in sustainable apparel consumption

This study proposes style consumption (SC) as a way to foster sustainable apparel consumption. In doing so, we identify explanatory and outcome variables of SC and also examine gender differences in these variables. Based on an online survey with 586 consumers, we find that frugal apparel consumption (FAC), fashion consciousness (FC) and ecologically conscious consumption (ECC) enhance the likelihood of SC. SC in turn increases environmental apparel purchase (EAP) and sustainable apparel divestment (SAD). The results also suggest significant gender differences both in motivational and behavioural variables included in the model. Specifically, females are significantly higher than males in FAC, FC and ECC. The tendency of SC, EAP and SAD were also higher for females than males. In addition, we find that gender is a significant factor mediating the effect of FC and that of ECC on SC.